The Business Inquirer #144
Sharing a high margin SaaS, a fast growing EdTech business, a wellness marketplace, and a remote tax & accounting firm.
Hello Friends!
In this week’s issue:
☁️ SaaS - 1 listings
💼 Online Service - 2 listings
🏡 Main Street - 1 listings
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by Smash.vc
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☁️ SaaS
Election Management Tool - $331k
Launched in 2013
Owner operated
Revenue: $107k
Profit: $98k
Margin: 92%
Multiple: 3.3x
💬 Quick Take
This online voting platform stands out for its high profitability, user-friendly interface, and robust security measures. The pay-as-you-go pricing model appeals to election managers seeking cost-effective solutions, while its mobile compatibility and expertise in ranked voting are significant advantages. However, the platform's reliance on an outdated Python 2 stack and the owner's focus shift to another venture could signal potential challenges in technology maintenance and future development.
✅ What I Like
High Profitability
The business boasts a very strong gross margin, indicating efficient operations.
Streamlined User Experience
The user-friendly interface and mobile compatibility enhance user satisfaction.
Cost-Effective Solution
Pay-as-you-go pricing makes it an attractive option for various sized elections.
Privacy-Centric
Strong privacy standards, using voter emails only for relevant elections, build trust.
Low Maintenance
The platform's ability to run with minimal maintenance is a significant operational advantage.
❓ Concerns
Technology Update Required
Migrating from Python 2 to Python 3 is necessary and could be resource-intensive.
Market Niche Vulnerability
The specialized nature of the service could limit market expansion opportunities.
💼 Due Diligence Questions
Technology Transition Plan: What is the estimated cost and timeline for the Python 2 to Python 3 migration?
Security Protocols: What specific security measures are in place, and how have they been tested?
Market Position: How does the platform compare to its competitors in terms of features and pricing?
Customer Satisfaction Metrics: Is there feedback or data indicating user satisfaction and areas for improvement?
Revenue Streams: Are there opportunities for additional revenue streams beyond the current pricing model?
Growth Strategy: What strategies can be implemented to attract more customers and expand the market reach?
Technical Team Requirements: What level of technical expertise is needed to maintain and upgrade the platform?
🚀 Growth Levers
Market Expansion: Explore new markets, such as small-scale community or organizational elections.
User Interface Enhancement: Invest in UI/UX improvements for a more engaging user experience.
Additional Features: Introduce advanced features like real-time analytics and custom ballot options.
Strategic Partnerships: Form partnerships with election bodies or NGOs to increase credibility and reach.
Marketing Campaign: Implement targeted marketing strategies to raise awareness and attract new clients.
Customer Support: Strengthen customer support for better user engagement and issue resolution.
Security Upgrades: Continuously update security features to maintain integrity and trust.
Diverse Voting Methods: Incorporate various voting methods to cater to different election types.
🙋🏻♂️ The Buyer
Tech-Savvy Entrepreneur: Ideal for someone with a background in technology and an interest in civic tech.
Innovative Problem Solver: A buyer who can navigate the unique challenges of the election management sector.
Growth-Oriented Visionary: Suitable for individuals looking to expand and scale a niche platform.
Community-Driven Leader: A buyer with a passion for strengthening democratic processes through technology.
💼 Online Service
Online & In-Person Coding School (EdTech) - Open to Offers
Launched in 2013
Headquartered in FL
100 employees
Revenue: $5.6M
EBITDA: $2.2M
Margin: 39%
Multiple: N/A
💬 Quick Take
This global technology education company has exhibited impressive growth with an 81% CAGR and a solid EBITDA margin. Its unique selling proposition lies in offering high-demand coding programs with a blend of online and in-person learning, supported by lifelong 1:1 coding mentorship. However, the business may have been helped by the COVID pandemic and potential buyers should closely examine the normalized run rate of the business.
✅ What I Like
Scalable Business Model
The company's ability to scale across geographies and tech stacks shows great potential for expansion.
High Employment Rate
An 81% employment rate for graduates enhances the brand's credibility and appeal.
Diverse Learning Formats
Offering both online and in-person courses caters to a wide range of learning preferences.
Strong EBITDA Margin
A 34% EBITDA margin indicates efficient operations and good cost management.
❓ Concerns
Market Saturation
The coding bootcamp market might face saturation, impacting long-term growth.
Dependence on Founders
Reliance on the expertise of founding members could be a risk if they exit.
Geographical Expansion Risks
Expanding into new markets brings inherent cultural and operational challenges.
Tech Industry Volatility
Rapid changes in technology demand constant curriculum updates.
💼 Due Diligence Questions
Operational Costs: What are the major cost drivers and how are they managed?
Graduate Success Metrics: How is the 81% employment rate verified, and what is the average salary of graduates?
Market Analysis: What are the market trends and competitive landscape in the coding education sector?
Expansion Strategy: How does the company plan to expand into new markets and technologies?
Curriculum Development: How frequently is the curriculum updated to keep up with technological advancements?
Regulatory Compliance: Are there any regulatory challenges in the education sector, particularly in new markets?
Customer Feedback: Is there data on student satisfaction and feedback?
Intellectual Property: What intellectual property does the company hold, and how is it protected?
COVID: How has the COVID period impacted the financial performance of the business? Is the strong growth sustainable?
Founders: What would be the impact on the business once the founders are not involved?
🚀 Growth Levers
Online Expansion: Amplify the online course offerings to reach a broader global audience.
Corporate Partnerships: Collaborate with tech companies for specialized training programs.
Alumni Network: Leverage alumni for referrals and building a community around the brand.
Curriculum Diversification: Introduce courses in emerging technologies and soft skills. Add AI into the curriculum.
Marketing Strategy: Implement a targeted digital marketing campaign to attract new demographics.
Affiliate Programs: Establish partnerships with educational institutions and career platforms.
Technology Integration: Invest in advanced learning technologies for an enhanced learning experience.
Financial Aid Programs: Offer scholarships or financing options to increase enrollment.
🙋🏻♂️ The Buyer
Experience in Education Sector: Ideal for buyers with a background in educational services.
Tech-Savvy Visionary: A buyer with a keen understanding of technology trends and market needs.
Global Expansion Capability: Suitable for those experienced in managing multi-geographical operations.
Entrepreneurial Mindset: A leader who is innovative and can drive the company’s growth phase.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Wellness Experience Marketplace - $149k
Launched in 2020
Revenue: $69k
Profit: $17k
Margin: 25%
Multiple: 8.8x
💬 Quick Take
This wellness experience marketplace has unique positioning in both personal and corporate event sectors, particularly excelling in the lucrative bachelorette niche. Its scalable business model, powered by technology and virtual assistants and a strong network of over 300 vetted wellness providers, offers a streamlined operational framework. However, marketplaces are known for being difficult to scale along with very low-profit margins.
✅ What I Like
Diverse Revenue Streams
A mix of direct sales, partnerships, and recurring corporate revenue ensures financial stability.
Scalable Model
Operations managed by virtual assistants enable easy scalability.
Strong Market Niche
Excelling in the bachelorette party sector provides a focused and profitable market.
Nationwide Network
Over 300 vetted providers across the U.S. offer a wide range of wellness services.
Minimal Overhead: The business maintains low operational costs, enhancing profitability.
❓ Concerns
Low Profit Margin
The marketplace business model relies on charging a small commission on a transaction. These are traditionally low margin businesses. New owner would need a strategy to improve efficiency and profitability.
Market Saturation
The wellness and event planning industry is competitive, requiring continuous innovation.
Dependence on Virtual Assistants
Reliance on VAs for operations could impact service quality if not managed properly.
SEO and Online Marketing Dependency
The business heavily relies on online visibility, which demands consistent effort and investment.
💼 Due Diligence Questions
Customer Satisfaction Data: Is there detailed feedback available from customers on their experiences?
Vendor Reliability: How are wellness providers vetted and their quality of service monitored?
Market Analysis: What is the competitive landscape, and how does the business differentiate itself?
Operational Workflow: Can you provide a detailed breakdown of the operational processes and VA responsibilities?
Marketing Strategy: What marketing strategies have been most effective, and what are the costs involved?
Growth Metrics: What are the current growth rates in different market segments?
Technology Infrastructure: How robust and scalable is the current technology platform?
🚀 Growth Levers
Enhanced Online Presence: Invest in SEO and social media marketing, particularly on platforms like TikTok and Pinterest.
Expand Service Offerings: Introduce new wellness services like massage, meditation, and group fitness.
Corporate Contracts: Develop monthly, recurring contracts for corporate wellness services.
Partner with Event Planners: Forge partnerships with wedding and lifestyle influencers and event planners.
Geographic Expansion: Expand the business to more cities and potentially explore international markets.
Community Building: Develop a paid community with recurring revenue.
Enhanced Marketing Efforts: Increase content creation and nurture existing partnerships more actively.
Virtual Product Expansion: Add more virtual session products and one-on-one options to cater to a wider audience.
🙋🏻♂️ The Buyer
Passionate Wellness Enthusiast: Ideal for a buyer with a passion for wellness and event planning.
Entrepreneurial Spirit: Suitable for an entrepreneur ready to scale a turnkey business with a solid foundation.
Digital Marketing Savvy: A buyer skilled in online marketing and SEO can leverage the existing digital footprint.
Operational Efficiency Expert: Someone adept at managing and optimizing virtual assistant-led operations.
🏡 Main Street
Tax & Accounting Firm - $2.8M
Launched in 1995
Mostly remote operated; Covers 50 states;
60-75% of the work is typical tax work
Revenue: $2.1M
Profit: $850k
Margin: 40%
Multiple: 3.3x
💬 Quick Take
This highly profitable and fast-growing CPA firm presents an attractive acquisition for experienced CPAs or firms looking to expand. Its strength lies in its substantial remote client base and proficiency in using modern tools. The firm's focus on tax work, alongside recurring bookkeeping and accounting services, underscores its stable revenue model. However, the necessity for an actively involved owner due to the complexity of the services could limit its appeal.
✅ What I Like
Stable Revenue Stream
The mix of tax, bookkeeping, and accounting services ensures a consistent revenue flow throughout the year.
Remote Service Model
The ability to serve clients in various states remotely broadens the market reach and operational flexibility.
Experienced Team
Having 8-12 employees, especially during the busy season, indicates a capable and adaptable workforce.
Growth Trajectory
The firm's rapid growth trajectory signals strong market demand and potential for further expansion.
❓ Concerns
Not for Absentee Owners
This is a hands-on business requiring active involvement, especially in high-level advisory roles.
Limited to Experienced CPAs
The firm’s complex services need a seasoned CPA at the helm.
Seasonal Workload Fluctuations
Busy tax seasons demand extra resources and can be intense.
Audit Work Challenges
While minimal, the audit work requires specific expertise and could be a growth area or a challenge.
💼 Due Diligence Questions
Client Retention Rates: How has client retention been over the years, and what’s the secret sauce?
Employee Skills and Turnover: What’s the team's skill level, and how often do people come and go?
Software and Tech Infrastructure: How up-to-date is the technology stack, and are there plans for upgrades?
Market Position: Where does the firm stand compared to its competitors in terms of services and pricing?
Growth Opportunities: Any areas of potential growth that haven’t been tapped into yet?
Client Demographics: What’s the breakdown of the client base - any major clients or sectors dominating?
Operational Processes: How streamlined are the internal processes, from client onboarding to service delivery?
Regulatory Compliance: Any compliance issues or red flags we should be aware of?
Succession Planning: What’s the plan for transitioning clients and staff to new ownership?
🚀 Growth Levers
Automation and Efficiency: Invest in automating mundane tasks to free up time for more high-value services.
Client Education: Host webinars, send out newsletters – become the go-to source for tax and financial insights.
Diversify Services: Introducing additional services, like financial planning, could attract a broader client base.
Digital Marketing: Enhancing digital marketing efforts can increase visibility and attract new clients.
Technology Integration: Integrating more advanced technology could streamline operations and enhance client experiences.
Networking and Partnerships: Building partnerships with other financial service providers could lead to client referrals.
🙋🏻♂️ The Buyer
Experienced CPA: An individual with extensive CPA experience and knowledge in tax strategy would be ideal.
Growth-Oriented Mindset: Someone looking to actively engage in and drive the firm's growth.
Client-First Approach: A buyer who values client relationships and is dedicated to maintaining high service standards.
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⚒️Tools & Resources
I want to share some tools & resources that I have found helpful. Please note that some of these are paid sponsors of the newsletter.
PrivSource - PrivSource helps you source deals and connect with transaction partners without ever paying a success fee.
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Rejigg - Platform that connects searchers/investors directly with owners of off-market small businesses ($500k - $10m revenue) considering exits. All deals are sourced by the Rejigg team. Their team adds 7-10 new deals each week.
Acquisition Lab - The Premier Accelerator for Buying a Business created by Walker Deibel, Author of Buy Then Build: How Acquisition Entrepreneurs Outsmart the Start-up Game. They combine world-class education, a vetted community, extensive group coaching, and resources to provide the first do-it-with-you buy-side advisory service.
Smash.vc - Whether you're looking to sell minority stakes in your business to take some chips off the table, looking for a partner to acquire an asset, or needing capital to complete an SBA deal, we'd love to chat with you.
BizNexus - Marketplace + off-market origination in one platform. The marketplace averages about 10k active listings & pre-CIM opportunities, and the off-market origination focuses on data & multi-channel.
Search Fund Coalition - community for the Entrepreneurship Through Acquisition ecosystem. Monthly events and meetups for acquisition entrepreneurs.
Deal Sourcing Guide - a comprehensive list of business marketplaces, brokers, deal origination firms, and more.
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